Coal Company CEO Thrived After a Slow Start
By James R. Hagerty, 12/15/21, Wall St. Journal

Michael K. Reilly’s career looked unpromising. A so-so
student, he suffered thru two semesters at a business
college only because his father insisted, then struggled to
support his own family on jobs selling real estate and
frozen steaks.

He finally found a niche at a mining company, Zeigler Coal Co.
When an exodus of senior colleagues led to his sudden promotion
to president of Zeigler in 1980, Reilly wasn’t sure he was
up to the job.

Several years later, he was shocked to learn that Zeigler’s
parent—Houston Natural Gas Corp., or HNG, later known as
Enron Corp.—was trying to sell the coal company. Fearing a
sale would put him and his executive team out of work,
Reilly sought an urgent meeting with HNG’s CEO, Kenneth Lay.
While Lay’s plane refueled at Chicago’s Midway Airport,
Reilly made his pitch: Let Zeigler execs try to buy the company.

Lay seemed skeptical but gave Reilly time to seek financing.
Reilly threw in nearly his entire net worth, around $300,000,
as equity and raised enough debt and equity elsewhere to
acquire Zeigler for $55 million in 1985. He bulked up Zeigler
with acquisitions and sold it in 1998 to AEI Resources Inc.
for $855 million.

Reilly died Nov. 28. He was 88 and had Lewy body disease.

He'd managed to escape Enron’s orbit over 15 years before
the company collapsed amid an accounting scandal. In
retirement, he lived in Hobe Sound FL. During over 60 years
as a golfer, he hit a hole-in-one 3 times. Reilly used part
of the fortune he made as a coal CEO to fund Roman Catholic
education. He wrote a brief memoir for his grandkids and
called it “A Wonderful Life.”

Michael Kieran Reilly, the 4th of 7, was born Jan. 4, 1933,
in Chicago. His father was in the commercial real-estate
business and lost his property holdings to lenders during
the Depression. Michael attended Catholic schools. As a
teenager, he shoveled snow and mowed lawns to earn enough
to buy a Raleigh 3-speed bike.

After leaving business college, he joined a coal-mining
company run by one of his uncles and learned to type invoices,
track coal shipments and talk to customers. Drafted into the
Army, he served as an office clerk at Fort Meade in Maryland
and was honorably discharged after two years.

While selling residential real estate in the Chicago area,
he met Maralyn Lyman. They began dating. She was shocked
when he “gave her up for penance” during the Advent season.
Soon afterward, she accepted his proposal. They married in
1958 and, using cash wedding gifts as a down payment, bought
a bungalow for $19,500.

Because commission income from real-estate sales was too
unpredictable, he gave that up to join his father-in-law’s
meatpacking company. His assignment, promoting frozen steaks,
proved a flop. In 1963, Reilly joined Zeigler, where his
uncle, Stuart Colnon, had become president. After his uncle
retired in 1975, Reilly became assistant to the new president.
While working, he studied business at Northwestern U. and
earned a master’s in management at age 46.

His boss at Zeigler and other colleagues clashed with the
parent company, HNG, and left in 1980. That gave Reilly
his chance to run the business. “I never expected to be
president, and I wasn’t confident I could do it,” Reilly
wrote in his memoir. His wife’s advice, he recalled, was
“Oh, you can do it.”

Zeigler owned coal mines in Illinois, and Reilly went down
into them to assure miners that the business would keep
operating despite the change in management. Two months after
he became president, a roof collapse at one of the Zeigler
mines killed 3 people.

When he met with Lay to discuss a buyout in 1984, Reilly
recalled, the HNG boss “looked at me impatiently.” Reilly
argued that HNG could only gain by letting him try to put
together an offer for Zeigler: The presence of another
potential bidder might push up the price. Lay agreed to
help pay the management bidding group’s legal fees.

When a rival bidder asked for info on liabilities for
pensions and black lung disease at Zeigler, Reilly said,
“we provided the stats and made it look pretty grim. They
couldn’t figure out what they were getting into.” His
management group completed the purchase and paid off a
9-year bank loan in 3 years. Reilly served as chairman and
CEO until the end of 1994, when he gave up the CEO job.

He saved money by moving Zeigler HQ from Chicago to
Fairview Hts, Ill., near the mines. He tried to visit the
mines at least once a week to stay in touch with workers
and encourage them to help find ways to reduce costs. He
was willing to tour underground shafts. “Thankfully,” he
wrote, “I’m not claustrophobic.”

Zeigler expanded by buying coal mines and other assets from
BP Co. and Shell Oil Co. By 1996, Zeigler was the 5th-largest
coal producer in the U.S., according to Barron’s.

Reilly also served as a director of Newmont Mining Corp.,
a gold producer.

His survivors include his wife, Maralyn Reilly, as well as
4 kids, 15 grands, 13 great grands, a sister and a brother.

In a eulogy, his son Mark recalled: “One time I complained
that I didn’t like my job. Dad looked at me and said, ‘Maybe
you should learn to like it. You need to think about what
you can do for the company, not what you can get from it.’”

https://www.wsj.com/articles/coal-company-ceo-thrived-after-a-slow-start-11639580404